Dubai: An insurance broker that has defaulted on paying premiums to insurance companies is blaming the Dubai real estate market crash for its delays.
Sun Insurance Brokers, a local company that earned Dh160,000 worth of premiums last year, delayed premium payments to seven UAE-based insurance companies by six months as it struggles with liquidity problems.
"This is mainly because some of our decisions did not go in favour to our activity. Because of the current market situation, it's been a tough six to seven months, even the collections from the market were quite difficult," Arun Paniyan, chief executive of Sun Insurance Brokers, told Gulf News.
He traced their financial problems to investments in Dubai properties. "We were not able to offload those and we were not able to get the right price also," he explained, referring to the current oversupply in the real estate market.
Eyes bank loans
The UAE Insurance Authority sent out a circular to insurance companies informing them of Sun Insurance Brokers' breach of topic 24 under Ministerial decree No 543 of 2006 by failing to pay its dues.
"The Insurance Authority obliges each authorised insurance company to stop dealing with the above mentioned company until any new declaration regarding it," the statement said.
But the company insists that it will clear the matter within a month while it raises money through the sale of assets and searching for cheaper bank loans, Paniyan said.
"We are looking to raise Dh25 million to Dh30 million to clear out our exposure."
Asked how clients who paid for their insurance policies through their brokerages will be affected, Paniyan said his company is making payments to urgent claims as they arise.
"We are talking to companies. We are immediately attending to client payments going to insurance companies as and when required. It depends on each company. Some have excellent relationships and continue to honour their commitments. Wherever there's issue we attend to that, discuss it and finalise."
Paniyan said the company was less worried about any potential damage to its reputation now than it is about dealing with its liquidity problem. "We're confident of our strengths. We have to prove we're genuine, that we will not run away from scene. We're going to attend to it."
Before the problem reached this point, the company faced problems raising finance through banks because the commercial properties in Business Bay that it invested in had not been handed over to them yet, he added.
